Best Scenarios for the Use of Ethereum Smart Contracts
While Ethereum is best known for being bitcoin’s major competitor, it is also known and highly favored for its smart contracts. Unfortunately, newbies or beginner crypto traders and investors don’t understand it.
This is not surprising seeing as the concept of Ethereum smart contracts appears confusing. To help make this easier to understand, here are some simple scenarios that also double as best use cases.
Smart Contracts in Financial Institutions and Payments
The financial sector seems to be the most enthusiastic about Ethereum smart contracts. And that makes sense because it can be very effective. For example, let’s say a bank gives out a loan and the terms of repayment requires a monthly payment schedule.
Ethereum Smart contracts can be drawn up so that once the person defaults, they automatically get a notice without anyone monitoring the system.
The notice can last for say, one week, after which, their accounts are automatically debited the amount due, or their friends and colleagues automatically get a notice of their payment default.
Another example can be insurance. Instead of having to file for and wait for the payout of compensation claims, a smart contract can be created so that once claimants enter a specific set of answers, the insurance company will immediately place their requests on the front burner, assign an adjuster immediately and payout the claims within 24 hours.
It can also be designed so that users automatically get their payment within 24-48 hours of filing compensation claims.
A third scenario would be one in which holders of mature bonds are immediately compensated without the need to file their claims. Once their bonds mature, the government automatically pays them their due.
This will not only result in accelerated processes, it’ll drastically reduce unnecessary overhead costs, eliminate so much redundancy in the system, and significantly increase workplace efficiency. Disputes about payouts too will be become virtually nonexistent, owing to the transparency of the process.
Use of Smart Contracts in Enforcing Copyrights
Plagiarism and content piracy is a huge global problems. Authors and publishing houses are losing millions of dollars daily because they are fighting too many piracy issues on so many fronts. A simple solution to this can be a smart contracts of sorts.
For example, authors can set up a smart contract that’s binding to their readers. This contract can restrict the copying of their books or transferring them from one person to another. In the event of a breach, the smart contract is immediately triggered, resulting in them being billed for another copy.
Another example would be its use in the music industry. Currently, tracking ownership rights and royalties is a cumbersome process that involves a lot of trusting.
With smart contracts implemented, ownership rights can be automatically tracked across board, and royalties in the right amounts disbursed automatically to the appropriate recipients.
This will eliminate the need for trust seeing as the transactions will be transparent and open for all parties to see.
A third example can be the automatic payment of content creators at specific dates once the minimum criteria is met. And once payments are made, the details can be made available for proper accounting.
Smart Contracts for Clinical Trials
Clinical trials are often shrouded in secrecy or discretion… for good reasons obviously. But, this same secrecy can alter the results of a clinical trial in the event of tampering. This is where smart contracts will play a significant role.
Smart contracts can be set up to improve the transparency of data management, thus eliminating the possible manipulation of data in favor or certain individuals or entities.
This way, smart contracts can help reinforce the standards of credibility required during clinical trials, and will ensure that participants, the public and those running the trials produce only valid, untainted outcomes.
Smart Contracts in Prediction Markets
Another niche where smart contracts can play a significant role in futures and prediction markets.
Smart contracts can be created so that investors can get a certain reward for predicting certain events and outcomes accurately. A good example of this is predicting if and when space exploration will become viable.
Speculators can more specifically chose events like when Virgin Atlantic will carry out its first successful space travel to Mars.
A second example can be predicting when the price of crude oil will hit $150 per barrel. When it does, the smart contract is triggered, while payments and compensation are immediately processed and paid.
Smart Contracts in the Internet of Things (IoT)
With the world actively moving towards AI and the integration/connectivity of all things, the Internet of Things is fast becoming a reality. Smart contracts can help accelerate the popularity of the IoT, resulting in an even more seamless solution.
For example, sensors powered by smart contracts can detect when you’re low on milk. Once it does, it will automatically send a notice to your home assistant, which then buys it on Amazon. Once Amazon gets the notice, it airdrops it to your home through its delivery drone.
Once it’s delivered, the house manager gets a text that there’s a delivery for the milk. He/she will then take it and store it in the fridge. Mind you, all these happened without you even lifting a finger. The smart contracts took care of everything.
Ethereum Smart Contracts Conclusion
There’s really no limit to what can be done with smart contracts. Their versatility, coupled with their encrypted and decentralized tech, makes them the perfect tool for the advancement of modern day and future technologies.
If you haven’t implemented smart contracts, now might be the right time to start thinking of and implementing it in your business. You just need to figure out how to use it in your business.